The demand function is set as Qd = 60-5P The supply function is set as Qs = 15P – 40

| February 11, 2021 | education

The demand function is set as Qd = 60-5P The supply function is set as Qs = 15P – 40 Find the seller’s income, assuming a business tax of $ 2 is entered. for each unit sold.

To begin with, we find the equilibrium price, for this we equate the demand with the supply (Qd = Qs).

1) Qd = Qs.

60 – 5P = 15P – 40.

60 + 40 = 15P + 5P.

100 = 20P.

P = 5.

Next, we determine the equilibrium supply and demand in the market, substituting the resulting price:

2) Qd = 60 – 5 * 5 = 60 – 25 = 35.

Qs = 15 * 5 – 40 = 75 – 40 = 35.

So, we know that 35 units are produced on the market. goods. For each purchased product, a tax of 2 rdol is paid. Having found demand, we learned that consumers also buy 35 units. Find the tax amount:

3) 35 * 2 = 70 (dollars) – the total amount for all goods.

Next, we find how much the seller receives from the sale and calculate the profit.

4) 35 * 5 = 175 (dollars) – revenue (the price per unit is 5 dollars, found earlier).

5) 175 – 70 = 105 (dollars) -profit.



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